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Could Weather Woes Increase Fertilizer Costs?

The recent heavy rainfall in the Midwest has some farmers worried about what  could do to prices for common inputs such as fertilizer. All that excess rain and snowfall could lead to leaching, limited product transportation and increased fertilizer demand to counter the loss of  soil nutrients.

Fortunately, fertilizer prices seem to be decreasing from their high of $200 per acre in 2011 to an estimated $133 per acre in 2015. 

According to David Widmar, a senior research associate at Purdue University and a partner with Agricultural Economic Insights, fertilizer prices are down 10% to 15% compared to spring 2015. Still, with crop prices also in a bear market, growers will want to think critically about how much and where to apply fertilizer.

“It might make sense to hold back on nitrogen some this year and not push for high yields ‘no matter what,’” Widmar says. “The economically optimal nitrogen rate for $3.50 corn is lower than what is was at $5 or $6. If you have soil with ample phosphorus and potassium levels, you might be able to consider reducing application rates for a year.”

Take a look at AgDay’s coverage of what adverse weather could mean for your fertilizer prices:

Growers with fields at risk for leaching, though, might need to buy additional fertilizer. You'll want to look at your soil type and note when you last applied fertilizer to calculate your risk of loss, according to Pro Farmer's Davis Michaelson. Coarser soils, like sandy loam, have a higher propensity for leaching.

Worries about flooding risk are also raising questions about potential supply challenges. Could increased demand from growers lead to tighter supply? Could high river waters prevent dealers from getting access to the fertilizer supplies they need? Michaelson and Pro Farmer Editor Brian Grete don't think so. Current pricing, which has included price reductions across the board, indicates that dealers are comfortable with the supply situation.

But softening fertilizer prices won't last forever. Michaelson warns the price will bottom out the first of February, with higher prices and increased demand later in the spring. Farmers who want to reduce their fertilizer costs should remember to shop around and negotiate for the best prices possible. 

 

 

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